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tv   Closing Bell  CNBC  February 28, 2013 3:00pm-4:00pm EST

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bringing it back, but when you're making money with it, this is when -- >> we've got to reel me him. >> got to reel me in. >> you're good at spending money, i bet. >> and time. >> i need a little more time, jeff. need a little more money. no, we're moving this car now. >> my saying to perry is they weren't perfect when they were new so we've got to stop, move on and make money. >> know when to walk away and there it is. >> obviously not one james dean was killed in, but he was killed, i think it was a '55 spider. this is a '56. wrap it up with this. your dream car, the car -- mine is a bugati atlantico. that's the highest, highest. >> that's serious. >> your dream car to find in a barn somewhere. >> oh, that's a tough one. >> that's tough. >> i've found so many in barns so that's a tough one. an original ac cobra. >> that's rare, too. >> quickly, perry, got one? >> if i'm going muscle i'm going $71 hemi. >> '71, a good year. >> guys, tuesday, 10:00 p.m.
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eastern, "the car chasers." can't way to see it. thanks for coming out to our neck of the woods in new jersey. mandy, come out and see the cars after the show is over. >> straight after the show in one minute's time. meantime, within striking distance of a new closing high on the dow. the leaders on the big board right now. hp, coke, dupont. the magic number, up 89 on the dow for the day, and a lot can happen in the next 60 minutes. we're all over this market right here on cnbc so stick right here because the final and most important hour of the trading day starts right now. thank you so much for joining us on "street signs." hope to see you same time tomorrow. "closing bell" is next. hi, everybody. we enter the final stretch. once again welcome to the "closing bell." i'm maria bartiromo at the new york stock exchange. history could be in the making in this final hour of trading. >> you think? >> no. >> i don't either.
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>> but we may be the wall of worry. >> it could be. >> i'm bill griffith. the dow knocking on the door of a new all-time high. was a lot higher earlier. we have to write this down now, 10, -- no, that's not right. 14,164 and change in order to be at an all-time high. we all know how stocks move in this final hour. it's the most important hour of the trading day so do not move an inch from your television screen. >> and the reason that i think that we won't do it, both think we won't do it today, is because there was selling going into the final hour, and there was sell imbalances but we'll see about that. up 35. special coverage planned for the next two hours, including an exclusive interview coming up with frederick oudea. he'll talk with us about the industry today. >> and we're hitting this rally from all angles, including those who say the run-ups since tuesday has been nothing more than end-of-month window dressing and come tomorrow reality will be setting in. we eel be looking at that very
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importantly. >> important point to make. end of the month, we often do see some different rotations at the end of the month. let's see where we stand right now. you can see exactly what happened in the last hour or so. we hit a peak at about 2:00 p.m. eastern and came off of it. still showing the gain of 35 points on the dow jones industrial average. we've given up much of the momentum that brought us so close to an a all-time high just a few minutes ago. the s&p 500 also higher, although, it too, has come off its best levels of the afternoon. take a look. very similar chart pattern. as you see the s&p down, up 5.5 point but down from the peak reached about half an hour ago. nasdaq, by the way, also strong today with a gain of about 12 points. all eyes on the dow though. we are, what? >> 47 points. >> you're welcome. >> you are right there. >> 52 points. >> okay. we're still pulling back here. this is the drama into the close, and we are on it in today's closing bell exchange with kyle harrington with harrington capital management, zach karabell, cnbc contributor
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and rick santelli. i'll break protocol and start with you, mr. santelli. what's the message of the market today? why do we keep moving higher here, and what do you see in this here? >> i think the message of the market is really complicated. granted we've had some pretty decent data, whether it was chicago ism today, some of the housing numbers, good data, but i also there's a lot of kind of juice involved as well, and all that is a combustionable mix. i'm a technician. when i look at the top in the dow over the last month or so, it's a broad-based very strange looking top, and i think part hft. i wouldn't underestimate the ability late in the day to maybe goose it up there a bit because the numbers can be rather large in the end, but i think it's hard to draw any major fundamental issues from the stock market, but i do acknowledge parts of the economy that are definitely doing pretty well. i just don't think that's necessarily the main motivation
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of the moves we're seeing in stocks >> you think we could hit an all-time high here. it's possible at the close? >> oh, absolutely, absolutely possible. >> there's a vote. >> and you're right because it's really the federal reserve. kyle, what do you think is going on here? >> i'm with rick. look, i want to be here on history day so buy, buy, buy. however, i think reality is going to set in. what we're doing at harrington capital is we're positioning accounts in a defensive fashion. we'll identify macro themes, biotech, tech, consumer staples is where we'll rotate some money. an example that have would be colgate palmolive, cl, right? a company that for 48 years in a row has paid and increased its dividend. own 45% of the oral care marketplace. we're going to go to conservative names to see how the d.c. situation shapes up with some very, very major issues, maria. >> is that what you want to do, follow the dividend payers? >> i'm going to follow dividend payers. we'll be protective and preserve capital in a market, again, that
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has a sequester. we're going to be facing a debt ceiling issue, bill, as we talked about. >> right, right. >> major issues here that i think could show a selloff, but today i want to be here with history. >> my friend, zach, you're the level-headed type trader. not losing any sleep over the italian elections or over the sequester. what's moving this market for you right now? what are you doing about it? >> first of all, bill, i want to know whether you're the wall of worry or if maria is and maybe we can get to that at the break. >> we both are. >> the reality is, looking back over a period of time, unlike an illness that ends really suddenly with an intense fever, we're breaking our black swan fever for the past three or four years. it's actually possible to view the market not from the lens of impending crisis, and i my friend selly is going to disagree with that, that there's a huge bubble or bond bubble or liquidity bubble. it's also in my view the fact is we live in a rather stable, somewhat boring, not very interesting, yes, challenging
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economic time with companies doing about as well as any actor on the global stage and that's why stocks are going to continue to go up with ebbs and flow. >> you're inclined to stay long this market. >> markets are up 40% s&p since mid-summer 2010 when everybody really got agitated by greece. throughout this period of crisis mentality markets have in fact done extremely well, even with the huge pullback in the fall of 2010 and some last year. >> ben willis from albert freeden company joins us on the floor of the exchange. you're the short-term trader. what are you doing right now? going to hang in there for this top? >> i think that we saw the top around 1:00, 1:30 this evening when the contracts blasted through. what i'm seeing right now is we're not going to quite make the record high that we had all hoped to make. doesn't mean we don't go higher. i know i've been saying for a while, and you and i have talked about the market needing a pullback. i think the pullback we saw from
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february 20th was very mild. i think we need to see more than that and i have the bull hoofs, my chest proves it, it was a bad call. the market needs to pull back. i get bullish and the market goes high. does this mean if you buy today, you'll be under water, probably not for long? again, like i said, eventually will go higher. the short-term trade from a technical perfect sieve look for a pullback. >> ben, we're looking at the market coming off the highs. what are you seeing on the floor in terms of flow? do you think we pull back further here in the next hour? >> the first iteration of when we've got to look at the imbalances, yes, they are for sale. what makes today very difficult three major indices all being reweighted on the close, the msc berra, s&p and a very dangerous place to be carrying and tomorrow the first day of the month which generally sees positive inflows, particularly from the retail side. pullback maybe, but probably not
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till the later part or if not monday if for any reason, but i think the highs of the day, from what i'm seeing right now were probably in earlier today. >> kyle herrington, i think your message to individual investors is important to reiterate. you're not looking for the whole forest but individual trees to invest in right now. >> that's right, and more than ever it's important to get, bill, a financial adviser that you trust, come up with a game plan and stick to that game plan but be very careful about identifying in a market like this where things are, you know, potentially at all-time highs jumping in right away to try to participate. i think you wait again for a pullback, identify names and industries that you like and then slowly engage in a plan. >> is there a downside risk to all the fed action, do you think? i mean, are we going to wake up one day and say holy moly there is inflation, and holy moly, you know, rates were manipulated for so long and now what's the downdraft of that? >> maria, i think that there's a real challenge here with the inflation issue. we see gas prices, right?
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we see the cost of, you know, the common goods that everybody buys such as milk and they are going up in price. >> yeah. >> but what i wouldn't do is chase this market trying to get outsized returns. i would sit there, think it through and come up with a plan and be very protective. >> who said of course to maria's question. >> i did. it was me. >> i thought it was you. >> i think we're kind of in the period between like '73 and '76, and we are, you know, a couple years away from seeing significant inflation because those seeds are being planted with all these programs. >> absolutely. >> ben bernanke said, you know, we don't see a problem with inflation. he's right, but yet, you know, when i look at my perennial garden i don't see flowers right now, but i guarantee you they will be there in a few months. >> all right. >> we assume all of this, bill. we assume inflation because that's the historical pattern. japan has gone 20-plus years without any discernible inflation. its deflation is worse than we thought. i don't see why we can't be here
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talking about deflation, low price stability and where did it go? >> the risk -- >> one of the great debates we're facing right now. >> that's a good debate because now you're arguing that the alternative is mediocrity. >> i'd rather mediocrity than crisis. >> i agree with you. zach, i totally agree with you. >> wow. >> that's good. we'll end there. as we keep monitoring the all-time high situation, there's less than an hour to go in trading for the month of february. josh lipton breaks down the month's winners and losers for us. josh? >> reporter: hey there, bill, leaders and laggards for the month. let's get to t.s&p 500 leaders for the month included names like constellation brands, safeway and hewlett-packard which reported better than expect the results on february 21st. the reaction on the street cautious. an let's talking about headwinds and personal computers and hewlett-packard up some 40% this year. laggards in the benchmark gauge, cliffs natural resources,
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newfield exploration and mcgraw-hill. earlier this month the justice department filed a lawsuit against mcgraw-hill's standard & poor's in connection with mortgage product ratings. in the dow, leaders, verizon, american express and jpmorgan. what isn't working caterpillar which told us that sales of its construction and mining equipment fell 4% worldwide in the three months to the end of january. and over at facebook the stock down about 13% for the month. still down some 30% since its ipo. bill, back to you. >> josh, thank you very much. we've set the stage. here we go into the final hour of trading with 50 minutes to go. the dow was up 72 points. we need to be up 89 points to be at an all-time high close and right now we're up 28. >> the world is watching this rally for sure. after the break, we'll talk exclusively with the ceo of societe begane frederic oudea.
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>> not all people believe in this rally. some think it's just window dressing for the end of the month. that debate on the issue coming up. >> five stocks that could derail this rally. we'll talk to two market experts who say why these five names could rain on the parade. back in a moment. [ engine revving ]
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josh lipton, let's get to you on herbalife. made some big news in the last hour and moved higher. what's going on now? >> reporter: exactly. herbalife, bill, is rocketing higher. herbalife saying it plans to add two more directors to its board chosen by activist investor carl icahn. remember icahn owns 14 million shares or 13.6% of this company. herbalife is in the middle of a big battle between two big names. bill ackman, a legend, saying that the company is a pyramid screen and carl icahn, herbalife now over 7%. bill, back to you. >> a big movement josh, thanks very much. let's get you caught up if you're just joining us. first, where have you been but here's what the markets are doing right now. the dow was up 2 points.
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we got to be 16 points away from an all-time high. we're up 22. s&p, that's not going to happen today. needs to be up some 40 some odd points and nasdaq, 2,000 points away from an all-time high. here's an interesting thing to note here. since the last time we hit a peak in october of 2007, only four s&p sectors are positive in that time, and the big laggard has been the financial sector, even though it's been a leader the last couple of years. since 2007 the s&p financial sector is down 50% still at this point so you wonder. still some time to catch up, or is it going to remain a laggard of some sort? we'll keep an eye on that and will have a debate on that coming up in a little bit. maria? >> what a week it's been. it was monday when the market saw a selloff because of the uncertainty caused by the italian election. bank stocks among those hardest hit including societe generale
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and the banks and markets came roaring back as they have been since declines are met with buying opportunities. at this moment we're knocking on the door of an all-time high with the dow up 20 point. joining me right now is an exclusive is societe generale show frederic oudea. good to have you on the program and good to see you again. >> thanks for having me, maria. >> you have a unique view on thing, all over the world watching this real take place in stocks. what's your view of it? what do you think is going on? >> i think you know there's probably more confidence after what we've experienced in 2011, the fact that the central banks are supporting the economy, also the liquid tis theities there sk equity is attractive particularly with credit. >> since you've got the federal reserve and the ecb buying. >> which i think will support the economy as long as we don't see more growth. >> let me ask you about the italian elections. i was surprised that the uncertainty over who will be the next prime minister there really
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caused a shock in the u.s. certainly. was that warranted, do you think? >> i think there was some overreaction of the market. first of all, this result is not totally unexpected. secondly, i don't think it changes that much the picture. probably not that good for italy, but anyway in europe 2013 it will be a transition year, you know. there is also an election in germany, difficult to expect any strong political movement before 2014 so i don't think it changed very much the picture actually. >> one of your analysts was telling clients to sell italian bonds and buy spanish ones. is this something that the banks would buy as well? >> we don't think we have to trade on sovereign debt. you've seen effectively an increase in a decrease in the price of the italian bond. there was one of reaction. again, it's for our client to decide. >> yes, of course. let's talk a bit about the
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banking sector because there's a real conversation going on right now in terms of should the major banks be split up? you've got regulators across the world having different opinions on this. where do you come out is this do you think we'll see a major change? >> i'm not sure. we had this debate in france because there is a law currently being discussed at the parliament regarding the organization of banks. let me say, first of all, i'm not sure it's the key issue regarding resilience of the banking system. what is key is the quality of the assets, quality of credit original nation. secondly let me say it's very important that we keep a system where effectively we can have capital market activities in europe in particular. we need more capital markets to finance the economies and today if there's one challenge it is growth, and so we should focus on growth and ensure that banks can effectively finance the economy and avoid too much disturbance. >> you reported setting aside nearly $400 million for a provision against litigation
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costs. are you comfortable with the capital that you have now whether for investigations, litigation in terms of all of the scandals out there and lawsuits that have followed, or any other needs? do you feel that you will come to the market to raise capital? >> no, definitely not, and this is something that we've highlighted in our results. they will be fully in line with bash 3 objectives and 2013, no doubt about this. the 300 million euros was a conservative posture. there are more and more litigations. i don't think sgnl and france was that much exposed. >> lawsuits with coming and following anything in the headlines out there. how do you deal with that? >> well, you need to be very focused on what we call operational risk, litigation risk, and that's part of the culture, the processors when we sell a product to check that
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effectively the client understands the product, that we comply with regulations. it's the new norm, the new rule of the game, definitely. >> you know, with all the different regulators that you're looking at, whether it's vickers in europe or basl, u.s. regulators, can there be a global standard across the world or is that unrealistic? >> i would like to say that and i'm still very worried about this trend towards fragmentation, different rules in different locations. i'm not sure it's good for the economy and the flow of capital. let me just say in particular in europe we need to, again, ensure that money is going to europe to finance debt, infrastructure, credit, so i'm worried about this trend. i hope that at some point people will, again, try to ensure that there's a consistency for global banks to again have an optimization of the financial service and the capital market activities. >> talk to us about capital markets right now.
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how would you characterize business and how is soc gen doing. >> a bit lower in february overall, but i think the activity has been relatively good. liquidity is there. people are looking for yields. more confidence, definitely. seen that in europe so overall not a bad start. >> you as well as your colleagues have already cut and raised capital. >> yeah. >> to sort of, you know, resize the business for the realities we're all facing. can you categorically say that you're done cutting, or is this an ongoing process? >> definitely it's done. we did a lot in 2012. we achieved our de-leveraging, and, secondly we had stopped by 13% so we're much more on the mood to focus on our areas of excellence and, again, to develop a strategy which is a focused one by a profitable one. what is very important precisely is have as much visibility as possible and as early as
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possible to define precisely these areas of excellence. >> do you think you have visibility for this year? what kind of 2013 would you expect? >> we are still waiting just in the u.s., for example, to have a bit more flesh on the regulations, you know, especially for foreign banks and, again, i hope that foreign banks will be able to develop further their activities in the u.s. because we -- we need access to the dollar, for example, so i hope that there will be more visibility 2013 all together. >> let me ask you about the libor rate because the commodities futures trading commission said they are working on an alternative to libor benchmark system. what system would you prefer to libor? >> having something that makes sense. they need to certainly enhance the governance of the system to avoid what we've seen. again, we are open to discuss any system. i think that was important something that is reliable, definitely. probably with some anonymity at
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some point that will be useful. let's see what the proposal is open to that. >> real quickly on france, you've called on france to cut taxes, cut spending, very much the same issues that we're dealing with here in the united states. >> yeah, yeah. >> how much concern is there in the eurozone about the sky high taxes and the inability to rein in debt? >> well, first of all, let me say we should first focus on catching public spending and inefficient cutting of public spending. that's the priority. we've started in france, but there's more to be done. secondly to reform labor markets, things like this, to enhance competitiveness. increasing taxes is not the right way to do things. we can accept for a very short period of time high tax, but at some point it's detrimental to the economy, so, again, i hope that to see at some point taxes going down in france. >> would you actually move societe generale's headquarters out of france if they didn't? >> listen, a bank cannot move
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its industry or headquarters like a company. were anchored in a country. we are anchored and we have a regulator. this is science fiction. >> you want to have partnerships, i understand, with regulators. >> we have -- may i say we have a regulator which has a good track record, and we've been able to keep with him a rational dialogue and this is very important. let me also say, as you know, we're going to move to a european banking supervisor which will be implemented in 2014 which is a very good thing. >> good you have to on the program. >> it's a pleasure. >> so appreciate your time. frederic oudea, societe generale ceo and in this programming note don't miss my exclusive interview with gary gensler of the cftc. he's making news today on his plan to modify a key industry interest rate. we're in the final stretch. 35 minutes before the closing bell sounds. a market up 35 points on the dow jones industrial average. coming up, we'll show you how the market got so close to an a all-time high after falling so
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low during the financial crisis. we'll take a look at the potential roadblocks that stand in the way of keeping it above that key level. believe it or not, financials have been the worst performing sector since we last hit a record high. consumer staples the best. which sector should you be buying right now. take a look after the break. stay with us. but when i started losing energy and became moody... that's when i had an honest conversation with my doctor. we discussed all the symptoms... then he gave me some blood tests. showed it was low t. that's it. it was a number -- not just me. [ male announcer ] today, men with low t have androgel 1.62% (testosterone gel). the #1 prescribed topical testosterone replacement therapy, increases testosterone when used daily. women and children should avoid contact with application sites. discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure.
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welcome back. with the markets this close to an all-time high, should you think about buying the s&p 500's best performing sector since the
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last time we were at a peak in 2007? that would be the consumer staple sector. it's been the best performer in the last five years, or should you go with the worst performing sector since the last peak? that would be the financials, down 50% in that time. let's start talking numbers on these etfs that represent each of these sectors, the consumer staples and the xlp and the financials etf as represented by the xlf. richard ross is global technical strategist and on the fundamental side it's regional vice president and do you go with the strength or consumer staples or laggards as they play catchup in. >> actually, bill, i'd be a seller of both groups here, the strong and the weak, and i think this month-end window dressing is a great opportunity to trim the sales in both etfs. let's start with the winner, the xlp, the consumer staples. while that s&p 500 still flirts with highs, levels that we've
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been at. 13 years we go back to even 2000. we're 30% above the 2007 highs, but when you bring up the chart you see,multi-year head and shoulders base breakout, a well-defined trend line but the problem that i have with the chart is we've already reached our upside target of 39. we have a $9 base. you add that on to the breakout at 29. boom, we're right there. >> all right. >> no risk reward. you want to be a seller. now we move into the seller. those are your laggards. look, a breakout to a fresh five-year high, but the last time we had a breakout back in 2011 in february coincidentally we failed. seven months later we were 32% lower. you can't trust the financials here. you want to be fading recent strength. >> okay. heather, fundamentally, what we know about the recovery. do you go with the consumer right now, or do you go with the financial sector? >> hi, bill. first i think it's important we define what a consumer staple is. it's a good that people are unwilling and able to cut with it from their budget regardless
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of their financial situation. so why would you then looking at these higher beta more risky and volatile names in the financial space which have been the worst performing sectors you stated. why would you look to -- to invest in that space when you have a more defensive play such as the consumer staples which investors tend to gravitate towards to participate in the stock market rally that generally also yield higher. >> right. >> those dividend-paying stocks tend to be in the consumer staple space. >> even though the financials have been a leader of this rally for the last couple of years here? >> yeah, even though that they have been a lead rally, you're right. we've seen though 220 million end flows into the xlp, the consumer statel ff that you've mentioned over the past week. week over week that's a 3.8% increase. buffet's berkshire hayt way and the heinz $23 billion acquisition may have helped that, but you definitely want to look at the consumer staples verse the financials and look at
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the sequestration coming tomorrow. >> okay. >> people are losing their jobs and taxes are going higher. you want to be in the names that thrive when the economy does poor. >> richard, you're just not impressed with either one. >> let me throw one more thing out there in terms of the staples. know they have been great performers, but let's focus on the u.s. dollar. look how strong that's been. very bullish on the dollar. we think that strength continues. 35% of that consumer state will's index is philip morris, coke and procter & gamble. that stronger dollar is going to provide a headwind for over one-third of this etf. at an all-time high, that's where you want to be selling. >> there you go. rich, heather, thanks for joining us today in your thoughts. >> thank you. >> talking numbers. >> we're in the final stretch here. 35 points higher on the dow jones industrial average. just about 30 minutes before the closing bell sounds. >> remember, we need to be up 89 to be at an all-time high. that's knot going to happen is this rally for real, i ask. our next guest is suspicious and warns that this looks like a falls breakout. that bearish call is coming up
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next. >> also, stay with us. dallas federal reserve president richard fisher is joining me warning the fed is risking stimulus overkill. he'll join us exclusively to explain why. that's later on on the "closing bell." >> the great hawk on the fed and be sure to catch cnbc's new primetime lineup including the reality series "treasure detectives" where experts analyze art and antiques to determine whether they are trash or treasure. it all begins tuesday right here at 9:00 p.m. eastern time on cnbc. tdd#: 1-800-345-2550 there's a few things that i really love-- tdd#: 1-800-345-2550 playing this and trading. tdd#: 1-800-345-2550 so i'm always looking to take 'em up a notch or two tdd#: 1-800-345-2550 and schwab really helps me step up my trading. tdd#: 1-800-345-2550 now i can use their most powerful platform, tdd#: 1-800-345-2550 streetsmart edge, on the web. tdd#: 1-800-345-255 so i get their most advanced tools on any computer. tdd#: 1-800-345-2550 i've also got a dedicated team of schwab trading specialists. tdd#: 1-800-345-2550 all this with no trade minimums. tdd#: 1-800-345-2550 and only $8.95 a trade. tdd#: 1-800-345-2550 after all, i'm in this to win, right? tdd#: 1-800-345-2550 open a schwab account and you can earn up to $600 cash tdd#: 1-800-345-2550 and 150 commission-free online trades.
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the market is up 31 points on the dow. let's get over to josh lipton and a check on herbalife. >> enjoying a big news. herbalife saying they will add two new directors chosen by carl icahn to the board. under the terms of the agreement icahn can also increase the size of his stake to 25% of the company. of course you have two big names here with two different views. bill ackman a large bet against the company saying it's a pyramid scheme and carl icahn, heard those two going at it live right here on cnbc with our own scott wapner.
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herbalife up now some 2% on volume. that's just about in line with its ten-day average. maria, back to you. >> all right, josh. thank you so much. about 30 minute away from the closing bell right now. we're keeping a close watch on whether this market can make it to an all-time high. not everybody is convinced that this rally is for real. >> some saying we're setting ourselves up for a direction and should take money off the table and others still believe in this market saying this is the time to go long equities and both join us to duke this out. >> thanks for having me. >> once we got to 14,000 on the dow just to use that as an example, we've stalled here this, raly. >> that's right. the market is getting choppy. we saw the big correction earlier this week. those are technical danger signs. compare that with what we're seeing in the real economy, a major divergence between economic activity, growth and durable goods spending down, consumer being hit with higher
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gas taxes and comments out of walmart and higher payroll taxes. seeing the danger signs technically. i think you want to take your money, take your money out early and come back and live another day. >> in other words, you think we're setting ourselves up for a bigger decline down the road because the fundamentals will show up and they will show things are pretty anemic. >> that's right. fact set data say analysts have cut their estimates for first-quarter growth. they had it at 2.4% and now it's at negative .02. what about the fundamentals of the market, do they not matter? >> the fundamentals do matter. let look at the fundamentals over the last 24 hours. new home sales up 29% year over year and chicago pmi new orders, 11-month high and unemployment an 8% improvement here over year. we may be looking at different data but growth is not only
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stabilizing but accelerating and back to barry's point, the fact that analysts have taken their numbers down that's a positive for the stock market because we're setting ourselves up for an upside surprise. >> what do you think? >> i think that's a negative because you're setting yourselves up for major disappointment. major divergence here between very, very bullish fundamentals. had a 40% gain in the market. i think we're due for a correction, and as the market starts to price in the weaker real data, the market is about earnings, and earnings are declining, and the fundamentals back that up. you don't get any bigger macro economic data point than gdp, and gdp is weak. >> barry, you don't get any bigger economic impact than the fed, and the fed is not going anywhere? >> i don't consider the fed an economic impact. the fed is a financial impact, but fed has been unable for years to impact real consumer spending. >> but they are impacting a market rally. you going to get in front of that train? >> yes, i am. had a big rally, and i think we're going correct it. >> just going on consumer
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spending. the biggest thing name packets discretionary spending in the u.s. is the price of the consumer's home. once again inventories are at literally seven or eight-year lows. prices across the nation in terms of home prices are up double digits. this is what's going to drive discretionary consumer spending. >> is this not to say we couldn't have some sort of a correction at some point? are you willing to absorb a 10% decline here and hang in there still? >> to be fair, had a pretty quick move here-to-date. the s&p coming in today was up 6.5% in two months. that's a great annualized return so the markets ebb and flow, but the fact is the market is going to go the direction of the economy, and the economy is stabilizing and will start to accelerate. >> i don't know that it's stabilizing. you make a lot of good points because we do see the spots of weakness and anemic growth in a lot of areas except for housing which continues to show strength which darryl correctly points out. let me get your talk on interest rates. when would you expect rates to
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start moving higher, i mean in, a substantial way? >> not in the near term, so not before the end of the year. >> and you still think we'll see a market selloff though you're not expecting rates to go higher. >> rates haven't been a major driver since the great recession. low rates haven't been able to turn this economy around. there's enough other drags out there, regulatory drags, the fiscal drags, drags from gas prices. i don't think the lower interest rates are going to turn this economy around. >> gentlemen, good to see you both. it's the great water cooler debate going on around these days, bullish or bearish, correction or not? that's what we face right now, and as we head towards the close with 20 minutes left, the dow is up 31 points. we were up 72,tant ligzly close to the all-time high but we've pulled back. >> we have, and i think one point that barry just made, that he doesn't even think higher rates are going to be the impact, but he still thinks we'll have low rates but we'll still see a market selloff. >> money would go back to cash. >> exactly. a little more than 24 hours away from the government's massive
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across-the-board spending cuts. not stopping lawmakers from leaving the town for weekend. in fact, most are already gone. unbelievable. the market doesn't seem to care and even though the markets take effect tomorrow, they set up a meeting, tomorrow, bill. >> go into effect midnight tomorrow night. >> so they set a day to meet on the day of. >> oh, please, plenty of time. >> come on. >> by the way, gap and salesforce.com are said to report earnings right after the close. we will, as tradition dictates, have the instant analysis of those numbers coming up later on "closing bell." stay tuned. >> there you go. good stuff. >> thank you so much. clients are always learning more
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responsibility. what's your policy? welcome back. the s&p retail index one of the better performers today despite jc penney getting pounded after atrocious earnings. courtney reagan rounding it all up for us. security. >> a lot of move into retail, a lot tied to expectations. looking to who is poised to take shares. believe it or not, jc penney
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shares are off intraday lows but still down 17%. the latest earnings show just how unresponsive consumers have been to the transformation so far and some investors are selling out today. traffic down 17% in a holiday quarter. same-store sales dropped 32%. kohl's should be one of the retailers picking up the consumerers jc penney has lost but it's not. the ceo noting the retail department store has lost market share in some categories. inventory not up way high, 17% year end. the consumer is voting with the spending or lack thereof and the merchandise that's there is all wrong. kohl's might have to work harder to grab shoppers leaving jc penney because kohl's locations are off mall. sear's department stores are located in the same malls as jc penney. only a handful of analysts even issue estimates for sears so consensus isn't truly representative for that name. after the bell specialty retailer gap does report, and that's a retailer that has been
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a bright spot recently. i'll bring you earnings when they cross. i've not been inside a sears to actually purchase something in a very long time. >> i couldn't tell you where my local sears is, to be honest. >> it's a problem. >> i'm not sure there is one near me. >> i don't either. >> oh, come on. >> i'm serious. >> in and out of sears all day long. >> listen to her, miss shopper here. >> let's get to eamon javers with breaking news from washington about the new treasury secretary, yes? >> reporter: hi, bill, that's right. well, it was a very low key debut for treasury secretary jack lew. he was sworn in this afternoon as treasury secretary. they did not allow the media or cameras to be in the room so we'll have to basically take it on faith here from the treasury department that that in fact happened, but right after the swearing-in of treasury secretary jack lew he moved immediately to a meeting of the financial stability oversight council. that is that new body created under dodd/frank to oversee all of the different components of
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the u.s. regulatory financial system. now, in that meeting we've just gotten a readout here. they said that they had an update from the s.e.c. among other things regarding s.e.c.'s progress on other reforms to money market mutual funds as well as a briefing about the s.e.c.'s staff november report reporting the impact of the s.e.c.'s 2010 measures to strengthen money market funds. they also talked a little bit about the stage of where they are in the process of designating companies under dodd/frank as significant, that, they say, they will not do until a final determination has been made for each company so that's the news here on new treasury secretary jack lew. back to you. >> and the reason there were no come race to record the swearing-in was because? >> reporter: well, that's a very good question. the white house press corps asked jay carney why that was, and he said, you know, basically it was just a ceremony, but some of the folks pointed out that in fact when secretary geithner was sworn in they did allow cameras
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in there and the president made some news in some of his comments there and a lot of folks in the press corps said they would liked to have been able to seen this one. >> that was not the photo op that the president wanted out there. >> thanks, eamon. >> 15 minutes before the closing bell sounds today. a market that's up 34 points on the dow jones industrial average. >> david darst says there's three potential he had yinds that could stop this rally in its track and he'll break them down. >> and how about the automatic government spending cuts are. they going to impact the baking industry? ceo ted clark will weigh in coming up on the "closing bell." stay with us.
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okay. markets backing away from all-time highs. doesn't look like today is going to be the day, and matt cheslock is very concerned about the complacency of the move that we've had here recently as we've moved higher. >> matt joins us right now, along with david darst morgan stanley wealth management. matt, explain what you mean by a complacent market. >> we've finally taken a look at what's going to go on in the government. tomorrow is not really that big of a day. we'll look out to march 27th where we could see, you know, the government really have to be forced to put into action. we have 30 days after tomorrow for the furloughs to kick in. that's what i mean by complacent.
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not looking for tomorrow, any news out of this, so we'll trend higher. we'll drift higher and we grinded, grinded, grinded, why not continue through tomorrow? tomorrow is the end of the month. >> pulling away here. i'll show the wires for a second here. david darst, guests that will try to ply us with gifts of sweets and things to make us fatter but darst is the only one that shows up with fresh fruit. the biggest apples you've ever brought. i don't know what that means, but is it your thoughts about the market and you're more optimistic here. >> we see good things happening of the you've got construction spending. you've got the german -- the german confidence index. you have the ism numbers. you have the retail sales that look like they will be pretty good for this coming month so the profits have come in 7%. the market was expecting 3% to 4%. would i say, however, corporate ceos, 70% of them have guided profit estimates lower. >> right. >> and that's a very, very high number so you'll watch that. you want to watch the situation in china because they have been withdrawing banking reserves as
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we've seen. >> this has been your theme for a while, the deterioration of growth and earnings in this country. >> yes. >> it goes along with our regular u.s. equity strategist adam parker, and he's basically looking for earnings to be lower this year than last year so coming in about $98, down 1.5% to 2%. the reason is financials, he's much less sanguine and optimistic and also the consumer. financial, consumer staples and consumer -- consumer discretionary are the ones that basically are underweight. we're overweight industrials, maria, and overweight health care. we still like those. >> look at the market. we are losing this fast. we are off about 16 points on the dow jones industrial average, well off the highs. matt, you're there on the floor. we understand there are some sell imbalances because of the rebalance going on. what can you tell us in terms of what's going on right now and what you're expecting in the close? >> i'm not surprised we're flat on the day. i'd like to see if we buy the
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dips going forward. a 2% correction the other day, did buy the dips. people are complacent in that regard as well where they can buy the dips and feel like they can go higher so i would anticipate liquidity in the close, and that may give people an opportunity to sell some stock here. >> walk us through the rebounds what. are you expecting at the close here? >> a rebalancing going on of the s&p 500 and the russell 2000 so traders are buying and selling stock to reposition themselves. what do you think the net effect is going to be, snait. >> probably nothing today, but why not see tomorrow? we'll have to get to the all-time high so people will reposition shortly. it's a friday. we've seen big moves up on friday so we'll probably see, if you want to sell, this is a great time to sell it. if you sell, it step in here and buy it and buy it for tomorrow and maybe sell it tomorrow night. >> why is it a great time to sell it? >> there's liquidity. haven't seen a lot of liquidity. volume low so we've taken advantage of these opportunities. >> thank you, folks. >> always good to see you. david darst and matt cheslock. coming back with the closing countdown.
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>> fed forever. >> you think? >> that's what the market wants. what about dallas federal reserve president richard fisher, the noted inflation hawk. he'll be here with us and is singing a very different tune. he'll join us exclusively in the next hour on the "closing bell." stay with us for that. ♪
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